Households' disposable income grew 2% last year, despite inflation

Despite the high inflation, households in the Netherlands’ real disposable income increased by 2.0 percent last year compared to 2021. That was mainly due to higher wages, more jobs, and government compensation for the high energy bills, Statistics Netherlands (CBS) reported on Friday.

Inflation amounted to 10 percent last year, but higher wages and government support for the high energy prices counteracted that.

Employees and self-employed both saw their income increase in 2022 compared to the year before. The total compensation grew by 7.5 percent. The number of jobs was 3.6 percent higher, and people in the Netherlands worked 3.4 percent more hours. Collectively bargained wages increased 3.3 percent last year, and mixed-income was 9.7 percent higher than twelve months earlier. The amount of benefits paid out was 5.2 percent higher.

Households also received compensation for the high energy prices. Low-income households received the energy allowance, and in November and December, all households with an electricity connection received 190 euros in compensation. Conversely, households spent 5.0 percent more on taxes and social security calculations.

“In 2022, mortgage debt was 27.8 billion euros higher than a year before. Because the economy grew faster than residential mortgages, the debt as a percentage of GDP decreased from 91. Percent in 2021 to 86.4 percent in 2022. That is the lowest level since 2003,” CBS said.

CBS also published its second calculation of economic growth in the fourth quarter of 2022, made 85 days after the end of the quarter. According to the second calculation, the Dutch economy grew 0.6 percent in the fourth quarter, the same as the first calculation 45 days after the quarter ended. Compared to the fourth quarter of 2021, the Dutch economy grew 3.2 percent, 0.2 percent more than in the first calculation. The economic growth for the entire 2022 amounted to 4.5 percent, the same as in the first calculation.

In the second calculation, CBS adjusted government consumption upwards. “This is partly due to higher expenditure by municipalities.” Household consumption was also higher than estimated in the first calculation. “Households spent more on services like catering, recreation, and culture.” The trade balance for services was adjusted downwards.